Morgan Stanley Forecasts Decline in Euro Value
Morgan Stanley forecasts that the euro will decline towards parity with the dollar, predicting a decrease of at least 7% in value in the coming months. Read Full Article at RT.com.
TroibNews 
Morgan Stanley has forecasted that the euro could approach parity with the US dollar in the coming months, driven by escalating political risks and economic frailties.
The bank anticipates that the euro will fall to 1.02 against the US dollar by the end of the year, a decline of approximately 7% from its present rate, according to David Adams, Morgan Stanley's head of Group-of-10 foreign-exchange strategy, as reported by Bloomberg.
Adams explained that the expected drop is influenced by the European Central Bank’s (ECB) likely action on interest rates, which could include a significant half-point reduction at its upcoming meetings.
“There is plenty of scope for the market to refocus on the fact that the ECB could be cutting deeper and faster than what is currently priced,” he stated. “This week’s meeting could prove an important catalyst for the market to start thinking about that.”
This projection stands as the gloomiest among those gathered by the news agency, contrasting with a general analyst consensus that sees the euro rising to $1.11 by the end of 2024, particularly as focus intensifies on the ECB’s impending rate decision.
The ECB is expected to opt for a quarter-point rate cut, marking the second reduction in this cycle, amidst challenges in sustaining economic growth within the region.
“Political risk premia and uncertainty are rising at a time when economic growth is slowing,” Adams mentioned. “Both of those factors suggest investors would be less willing to deploy capital in the region.”
Thomas Evans for TROIB News
The bank anticipates that the euro will fall to 1.02 against the US dollar by the end of the year, a decline of approximately 7% from its present rate, according to David Adams, Morgan Stanley's head of Group-of-10 foreign-exchange strategy, as reported by Bloomberg.
Adams explained that the expected drop is influenced by the European Central Bank’s (ECB) likely action on interest rates, which could include a significant half-point reduction at its upcoming meetings.
“There is plenty of scope for the market to refocus on the fact that the ECB could be cutting deeper and faster than what is currently priced,” he stated. “This week’s meeting could prove an important catalyst for the market to start thinking about that.”
This projection stands as the gloomiest among those gathered by the news agency, contrasting with a general analyst consensus that sees the euro rising to $1.11 by the end of 2024, particularly as focus intensifies on the ECB’s impending rate decision.
The ECB is expected to opt for a quarter-point rate cut, marking the second reduction in this cycle, amidst challenges in sustaining economic growth within the region.
“Political risk premia and uncertainty are rising at a time when economic growth is slowing,” Adams mentioned. “Both of those factors suggest investors would be less willing to deploy capital in the region.”
Thomas Evans for TROIB News
